Qualcomm slashes its profit forecast because Apple is going to stop paying royalties

(Reuters) - Qualcomm Inc said on Friday Apple Inc will not pay royalties to its contract manufacturers, that are owed to the chipmaker, for sales made in the first quarter of 2017.

Qualcomm, the largest maker of chips used in smartphones, also said the iPhone maker will withhold further payments until the ongoing legal dispute with Qualcomm is resolved.

Apple sued Qualcomm in January accusing Qualcomm of overcharging for chips and refusing to pay some $1 billion in promised rebates.

Shares of Qualcomm fell 4.3 percent to $50.91 in premarket trading, while shares of Apple were up marginally at $143.92.

Qualcomm also slashed its profit and revenue forecasts for the current quarter, to exclude royalty revenue from Apple's contract manufacturers.

The company said it now expects current-quarter revenue of $4.8 billion-$5.6 billion, down from the $5.3 billion-$6.1 billion it had expected previously.

Qualcomm also cut its forecast for current-quarter adjusted profit to 75-85 cents per share, from 90 cents-$1.15 per share. (Reporting by Anya George Tharakan in Bengaluru; Editing by Sai Sachin Ravikumar)